Info!! Correcting 2 Non Bad Trading Psychology Mistakes

Too often, traders receive got inwards 1 slice of information later another, reading emails, scanning charts, reviewing interrogation pieces, tracking news, in addition to talking with other traders, in addition to never larn to the betoken where the information is transformed into knowledge.  Someone trading the stock of a fellowship may compile all sorts of statistics in addition to tidings items virtually that company, simply those inwards themselves don't ensure a cognition of the company's competitive advantages in addition to disadvantages or its increment potential.  If somebody gathered pieces of information virtually our lives, would they genuinely sympathize us?

We oft listen that the pump of trading psychology is champaign of written report in addition to the command of emotions.  Other times, nosotros listen that openness to in addition to awareness of our emotions is crucial to enlightened determination making.  Both perspectives receive got merit, yet both brand the fault of assuming that trading psychology is basically virtually what in addition to how nosotros feel.  

Not so.

Every flake every bit of import to our trading every bit our emotional psychology is our cognitive psychology:  how nosotros procedure information in addition to plow it into knowledge.  Indeed, I would debate that, every bit nosotros displace from outset traders to experienced ones, emotion becomes less of a fundamental focus for trading in addition to information processing becomes to a greater extent than critical.  Lo in addition to Repin, for example, found that traders responded to heightened marketplace position volatility with emotion, with inexperienced traders far to a greater extent than reactive than experienced ones.  Experienced, successful traders may or may non wrestle with emotional responses to a marketplace position scenario, simply they volition ever live on actively involved inwards processing that scenario in addition to searching for opportunity.

Two cognitive psychology mistakes are mutual with traders:

1)  Not making the fourth dimension to get together information into knowledge - Key to cognition is finding meaningful patterns inwards information in addition to placing those patterns into a framework for understanding.  In my trading, I runway statistics ranging from volume, breadth, sentiment, in addition to buying/selling pressure, simply it's the integration of the information that contributes to understanding.  One cast of integration is inwards the cast of a mathematical model.  Another cast is a conceptual framework that is grounded inwards the concept of marketplace position cycles.  If I larn in addition to then caught upwards next the information that I don't engage inwards integration, I volition neglect to perceive valid trading opportunity.  Equally problematic, I volition tend to human activity on private pieces of information that catch my attending without placing that information into proper context.

2)  Not playing to our information processing strengths when nosotros generate trading ideas - Each of us is quite unlike inwards how nosotros brand sense of the world.  Some of us are quite mathematical in addition to analytical, assembling views from the reason up.  Others are conceptual in addition to qualitative, looking for wide patterns to derive a top-down consider of the world.  My most native cast of information processing is writing.  Quite literally, writing is my agency of thinking aloud in addition to generating an internal dialogue that places information into perspective.  Other traders arrive at the same affair past times reading in addition to taking notes; yet others past times engaging inwards multiple conversations.  Far also often, traders neglect to plow over their potential because they're non accessing their cognitive potentials.  They are making sense of markets inwards somebody else's style, non their own.

I've lately begun an experiment inwards which I engage inwards rattling extended journaling, writing out my assessment of the most recent day's marketplace position in addition to where it fits into the broader movie of marketplace position cycles, simply also writing out every unmarried merchandise that I place, why I placed it, what worked in addition to didn't work, in addition to what I receive got done good or could receive got done differently.  The depth of the journaling is far unlike from the typical terminate of twenty-four hr catamenia notes on trading in addition to markets.  In practice, I proceed writing in addition to writing until I larn to the betoken where cognition results from the information.

It's early on days, simply the method in addition to then far has been helpful.  One unintended consequence:  I honor myself feeling to a greater extent than confidence inwards trades when I've processed the chance inwards greater depth, inwards ways that are most productive for my sense-making.

Further Reading:  The Two Brains of Trading
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